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AN EXAMINATION OF THE IMPACT OF NIGERIAN CORPORATE TAX LAW ON INVESTMENT PROMOTION

Law Project Topics and Materials

AN EXAMINATION OF THE IMPACT OF NIGERIAN CORPORATE TAX LAW ON INVESTMENT PROMOTION

ABBREVIATIONS

 

AP

Assessable Profit

API

Aid to Pioneer Industries

ATM

Automated Transaction Machines

 

CAC

 

Corporate Affairs Commission

CAMA

Companies and Allied Matters Act

CITA

Companies Income Tax Act

CITAA

Companies Income Tax Amend Act

CITO

Company Income Tax Ordinance

CGTA

Capital Gain Tax Act

CDG

Corporate Development Group

CTR

Commonwealth Tax Rate

DTA

Double Taxation Agreements

DTO

Direct Taxation Ordinance

ETA

Education Trust Act

FDI

Foreign Direct Investment

FDIs

Foreign Direct Investments

FIRS

Federal Inland Revenue Service

F.G

Federal Government

GACs

Government Approved Channels

GDP

Gross Domestic Product

 

IDITRA

 

Industrial Development (Income Tax Relief) Act

IDITRO

 

Industrial Development (Income Tax Relief) Ordinance

ISPs

Internet Service Providers

ITOs

Integrated Tax Offices

ITO

Income Tax Ordinance

IDCs

International Drilling Companies

LFN

Laws of the Federation of Nigeria

LRPL

Land Revenue Proclamation Law

LTO

Large Taxpayers Offices

MNCs

Multi- National Companies

NDTA

Nigerian Double Taxation Agreements

NITEL

Nigerian External Telecommunications Limited

NOO

Notice of Objection

NORA

Notice of Refusal to Amend

NRO

Native Revenue Ordinance

NSE

Nigerian Stock Exchange

NTP

National Tax Policy

 

NTR

 

Nigerian corporate Tax Rate

OECD

Organization     of    Economic     Cooperation     and Development

PAYE

Pay As You Earn

PITA

Personal Income Tax Act

PPTA

Petroleum Profit Tax Act

PYB

Preceding Year Bases

SMTO

Small and Medium Taxpayers Offices

SSG

Support Service Group

TAT

Tax Appeal Tribunal

TCC

Tax Clearance Certificate

TOG

Tax Operations Group

TNCs

Transnational Corporations

UK

United Kingdom

UNCITR

United Nations Commission on

International Trade Law

USA

United States of America

WTO

World Trade Organization

 

WHT

 

Withholding Tax

VSAT

Very Small Aperture Terminal

VATA

Value Added Tax Act

YOA

Year Of Assessment

ABSTRACT

Companies Income Tax Act (CITA) is the main legislation that governs the taxation of corporations in Nigeria. About one trillion Naira was generated from the tax imposed by the Act in 2013. The amount was equivalent to one fifth of Nigerian federal government budget for that year. The amount could be used by government to perform its duties of providing public services and infrastructures of which investment promotion is included. Investment is very vital to the economic growth of a nation. This is because it creates jobs, alleviates poverty, reduces unemployment and brings foreign capitals. Consequently, government needs to promote investment and advertise for the available investment opportunities in the country. However, there are many factors that are considered by prospective investors before deciding on where to invest their capitals. Corporate tax and the laws governing it are part of them. The main question that comes up here is whether the Nigerian corporate tax law has impact on investment promotion.  In other words, what impact does the law have on investment promotion? Is the law effective in promoting investment in Nigeria? Is there any loophole in the present corporate tax law that discourages investment in Nigeria? Is Nigerian corporate tax incentive regime adequate in curtailing anti-investment attitude in Nigeria? Is there any measure  capable  in  curbing  anti-investment  in  Nigeria?  This  research  entitled  ―An Examination of the Impact of Nigerian Corporate Tax Law on Investment Promotion‖ is an answer to these questions. The main aim of this work is therefore to ascertain the impact of the Nigerian corporate tax law on investment promotion. Thus, it focuses on ascertaining the efficacy of as well as the imperfection in the present corporate tax law in the promotion of investment in Nigeria. Doctrinal method of data collection is adopted. Statutes, books, journal articles and many other documents are used. To ascertain the result of this work, structured interviews with some investors and other stakeholders are conducted. It has been found that the present corporate tax legislation is effective in promoting investment in Nigeria. Constant increase in the number of companies and the amount of investment in the country shows a positive impact of the law on investment promotion in Nigeria. However, the law is not absolutely perfect. It is  plagued  by several problems that have negative impact on the promotion of investment in country. These inter alia include the rate of corporate tax, multiple taxation and non-compliance with the corporate tax law. Others are penalties for violation of the law perpetrated by some dubious companies and mismanagement of fund generated from taxation. To enhance the effectiveness of the law in stimulating more investments domestically and attract more FDIs it is recommended that the rate should be reduced. Multiple taxation should be eliminated and tax avoiders and evaders should be severely punished. Finally provisions of corporate tax penal regime that encourage evasion or avoidance of tax which reduces the government revenue usable for investment promotion should be amended.

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